Estate planning can be a daunting task to consider, even if you know exactly who you would like to manage your affairs and who should receive your assets. It can be even more confusing when deciding whether you should create a will or if a living trust would be better suited for your needs. Then there’s another important question – can I have both? The short answer is: yes! In fact, you could be leaving some bases uncovered if you don’t have both. Let’s explore why this is the case.
If I Already Have a Will, Do I Need a Trust?
The answer to this question will depend largely on your own personal needs. It is entirely possible to have an effective and efficient estate plan that is based upon a will (as opposed to a trust). If you have a relatively small estate, or if most of your assets can have beneficiary designations, a will may be all you really need to ensure smooth administration of your estate upon your death.
The problem with having just a will, however, is that it’s often only a half-measure. People often think that if they have a will, it will be easy for their loved ones to manage and distribute their assets upon their death without court intervention. That is a common misconception. In reality, a will is essentially instructions to the probate court of who should handle your estate, and who should receive your assets. Unless you have a very small estate, your assets will get tangled up in the probate process after your death, and that usually takes several months for your family to sort out. If you want to avoid the probate process, a trust is the way to go.
If I Already Have a Trust, Do I Still Need a Will?
In a perfect world, the answer to this question would be “maybe not.” Unfortunately, the reality is that you absolutely should have a will even if you already have a trust. Here’s why:
A trust helps avoid the probate process as to any assets that are either titled in the name of the trust or have the trust listed as a beneficiary. After you create a trust, it’s your responsibility to re-title and re-designate beneficiaries on all of your assets so they can be funneled through the trust. The reality is that it’s easy to overlook an asset, like that savings account you may have opened 10 years ago and promptly forgot about. This is where a pour-over will can save the day.
A pour-over will is a special type of will that you have when you already have a trust. It’s called a pour-over will because it essentially says any assets that accidentally get left outside of the trust shall be “poured over” into the trust. That way, any assets that got left behind can catch up with the rest of your assets and be distributed according to the terms of your trust. This is why we always include a pour-over will when we create a trust-based estate plan for our clients.
At the end of the day, it’s absolutely possible to have both a will and a trust. Whether you have a will and want to avoid probate by creating a trust, or you have a trust but need the added protection of a pour-over will, it’s not only possible but highly recommended. Schedule a consultation with us today to determine which estate planning vehicle is best for you.